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Fairer funding

Global sum allocations, to fund the delivery of core GP services to patients for practices operating under a GMS contract, are calculated using the Carr-Hill formula.

The formula calculates the relative need of each GMS GP practice compared to all other practices in England.

It consists of the following components:

- An adjustment for the age and sex structure of the population (based on the GP patient list)
- An adjustment for the additional needs of the population, relating to morbidity and mortality
- An adjustment for list turnover, as new patients tend to need more consultations than other patients
- A nursing and residential homes index
- Adjustments for the unavoidable costs of delivering services to the population, including a market forces factor and rurality index

The formula calculates the share of the overall pot of resources that each practice receives, based on patient list size adjusted for the factors mentioned above.

Each quarter, the actual pot of resources for England that is shared out is calculated by multiplying the total number of registered patients on GMS lists in England by the price per patient figure, which is £64.59 in 2010-11:

Resources pot = sum of patients on GMS lists in England x £64.59

Each GMS practice then receives its share of this pot as calculated using the Carr-Hill formula.  In 2009-10 some £1.7 billion was paid out in Global Sum payments to GMS practices in England.

The Department is working with the British Medical Association (BMA) to deliver a fairer funding system for primary medical care. Our aim is to ensure that the income GP practices receive for providing NHS services is related fairly to the number of patients on their list and the relative health needs of their local population. This includes ensuring reduced reliance on the Minimum Practice Income Guarantee (MPIG). The MPIG is an income protection scheme, based on historic data and agreed under the 2004 GP Contract. Under the MPIG scheme, many practices continue to receive income guarantees that do not necessarily bear any relation to the size and needs of the patient population they now serve.

Progress has been made towards phasing out MPIG, so that more resources can go into providing fair payments based on the needs of the local population served by each practice. The percentage of practices reliant on MPIG currently have  decreased  from around 68 per cent in 2009/2010 to an anticipated 61 per cent in 2010/2011. Payments through MPIG are expected to drop further from £130m to around £110m in 2010/2011.

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